Gold keeps rising, Europe in the spotlight

Gold and other precious metals had big gains last week due to the U.S.A. Federal Reserve meeting and the probability of another round of monetary easing. This week has started off with the same rise in prices and monetary easing continues to be the reason. However, the location is now changed to Europe and meetings of the European Central Bank (ECB). “The ECB is evidently planning to launch a new government bond intervention program, which would inject further liquidity into the market. This should also benefit commodities due to the lack of attractive alternative investments,” analysts at Commerzbank said in a note. Some speculate these actions by the ECB could be implemented as soon as this week.

In the United States, there were more negative economic reports released today. The August manufacturing report was shown to have the largest drop in over three years. Economists estimated the national factory activity to have a median of 50.0 and it came in at 49.6. It shows an unforeseen contraction in the sector. U.S. construction also fell off by 0.9 percent, as with the manufacturing report, expert predicted an increase as well. Both of these reports give more talk of monetary easing by the Federal Reserve.

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